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Newly released data from the Restaurant Association shows a mixed start to the year for the hospitality sector, with flat national sales growth and mounting pressure from operating costs and workforce shortages.
Total industry sales for the first quarter of 2025 reached $4.00 billion — a modest 1.0 per cent increase compared to the same period last year. While this figure represents a 5.9 per cent drop on the previous quarter, this is not unexpected given Q4 typically includes the busy festive and function season. For other parts of the country — particularly holiday destinations — Q1 remains their peak trading period, contributing to some of the regional variation seen in the results.
“The summer trading period was softer than expected for many operators, and long-standing challenges like high fixed costs, wage pressure, and staff shortages continue to weigh heavily,” says Restaurant Association CEO Marisa Bidois. “While inflation may be easing on paper, our members are still feeling significant cost strain on the ground.”
Despite the subdued national picture, several regions posted standout results. Nelson led with a 16.5 per cent year-on-year increase in revenue, followed by Queenstown-Lakes at 13.4 per cent — both buoyed by domestic tourism and destination appeal. In contrast, Auckland saw marginal growth of just 0.4 per cent and other regions such as Marlborough and Hawke’s Bay reported declines.
“This data reinforces the fact that a one-size-fits-all recovery approach won’t work. Tailored, regionally responsive strategies are vital,” says Marisa.
The Restaurant Association’s quarterly survey also shows that staffing remains a challenge, particularly for senior roles, with 72 per cent of businesses reporting difficulty in filling these positions. However, this is a slight improvement on previous quarters, suggesting some easing of the extreme pressures seen in recent years.
Employers also note that entry-level roles are becoming easier to fill, though workforce shortages and visa processing delays continue to constrain growth for many.
In response to the ongoing challenges, The Restaurant Association is progressing at pace with the 65-point sector action plan developed at the industry’s Hospitality Summit, with a particular focus on workforce development, business sustainability, and long-term competitiveness. Engagement with government is ongoing, including discussions on improving immigration settings and food safety systems, and ensuring that international tourism funding supports the promotion of New Zealand’s food and beverage experiences.
“Hospitality businesses aren’t standing still — they’re adapting, innovating, and working hard to stay viable,” says Marisa. “To unlock the next phase of growth, we’ll continue working with government and our partners to progress our action plan and ensure the value our sector brings — culturally, socially, and economically — is fully recognised.”
